IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Fixed and Flexible Rates: A Renewal of The Debate

Author Info

Listed author(s):
  • Jacques R. Artus
  • John H. Young
Registered author(s):

    Abstract

    The paper reviews the extent to which a decade of analysis and experience has altered thinking about the choice of an exchange rate system. The advantages of flexible rates are viewed to have been exaggerated. They do not permit governments to have permanently higher rates of economic activity at the expense of higher inflation as some thought. Further, the slow speed of adjustment to relative price changes limits the contribution of flexible rates to external adjustment in the short-run, and the degree of insulation from external influences that they provide. Finally, flexible rates tend to be fluctuating rates, and, although there is little empirical evidence so far showing that the fluctuations have had adverse effects on trade and capital flows, the exchange rate instability more than any other factor has led to a certain disillusionment with the floating rate system. Notwithstanding the drawbacks of flexible rates, there will be a continuing need for exchange rate flexibility over the next few years, and some analysis is given of the problems of achieving greater stability under flexible rates or the requisite amount of flexibility under pegged rates.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.nber.org/papers/w0367.pdf
    Download Restriction: no

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 0367.

    as
    in new window

    Length:
    Date of creation: Jun 1979
    Publication status: published as Artus, Jacques R. and Young, John H. "Fixed and Flexible Rates: A Renewal of the Debate." International Monetary Fund Staff Papers, Vol. 26, No. 4, (December 1979), pp. 654-698.
    Handle: RePEc:nbr:nberwo:0367
    Note: ITI IFM
    Contact details of provider: Postal:
    National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.

    Phone: 617-868-3900
    Web page: http://www.nber.org
    Email:


    More information through EDIRC

    Keywords:

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as
    in new window


    1. Thomas Willett & Edward Tower, 1970. "Currency areas and exchange-rate flexibility," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 105(1), pages 48-65, September.
    2. Lance Girton & Don E. Roper, 1976. "Theory and implications of currency substitution," International Finance Discussion Papers 86, Board of Governors of the Federal Reserve System (U.S.).
    3. Cornell, Bradford, 1977. "Spot rates, forward rates and exchange market efficiency," Journal of Financial Economics, Elsevier, vol. 5(1), pages 55-65, August.
    4. Costas Azariadis, 1976. "On the Incidence of Unemployment," Review of Economic Studies, Oxford University Press, vol. 43(1), pages 115-125.
    5. Andrew D. Crockett & Morris Goldstein, 1976. "Inflation under Fixed and Flexible Exchange Rates (L'inflation en régime de taux de change fixes et en régime de taux de change flexibles) (Inflación con tipos de cambio fijos y flexibles)," IMF Staff Papers, Palgrave Macmillan, vol. 23(3), pages 509-544, November.
    6. Barro, Robert J., 1977. "Long-term contracting, sticky prices, and monetary policy," Journal of Monetary Economics, Elsevier, vol. 3(3), pages 305-316, July.
    7. L. M. Muir, 1977. "Comment," Economic Papers, The Economic Society of Australia, vol. 1(56), pages 23-24, October.
    8. Gordon, Donald F, 1974. "A Neo-Classical Theory of Keynesian Unemployment," Economic Inquiry, Western Economic Association International, vol. 12(4), pages 431-459, December.
    9. F. Biesmans, 1977. "A Survey," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 48(1), pages 5-36, 01.
    10. Susan Schadler, 1977. "Sources of Exchange Rate Variability: Theory and Empirical Evidence (Sources des variations de taux de change: analyse de la théorie et observation empirique) (Fuentes de variabilidad del tipo de cam," IMF Staff Papers, Palgrave Macmillan, vol. 24(2), pages 253-296, July.
    11. Irving B. Kravis & Robert E. Lipsey & Eliot R. J. Kalter, 1977. "Export Prices and Exchange Rates," NBER Working Papers 0182, National Bureau of Economic Research, Inc.
    12. Dornbusch, Rudiger, 1976. "Expectations and Exchange Rate Dynamics," Journal of Political Economy, University of Chicago Press, vol. 84(6), pages 1161-1176, December.
    13. John H. Kareken & Neil Wallace, 1978. "International monetary reform: the feasible alternatives," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sum.
    14. Rudolf R. Rhomberg, 1964. "A Model of the Canadian Economy Under Fixed and Fluctuating Exchange Rates," Journal of Political Economy, University of Chicago Press, vol. 72, pages 1-1.
    15. J. J. Polak, 1957. "Monetary Analysis of Income Formation and Payments Problems," IMF Staff Papers, Palgrave Macmillan, vol. 6(1), pages 1-50, November.
    16. Martin Neil Baily, 1974. "Wages and Employment under Uncertain Demand," Review of Economic Studies, Oxford University Press, vol. 41(1), pages 37-50.
    17. anonymous, 1978. "Does the sinking U.S. dollar mean the float isn't working?," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Sum.
    Full references (including those not matched with items on IDEAS)

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    as
    in new window


    Cited by:

    1. Jacob A. Frenkel & Morris Goldstein, 1986. "A Guide to Target Zones," NBER Working Papers 2113, National Bureau of Economic Research, Inc.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Access and download statistics

    When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:0367. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.